Flagstar Bank offers a physician loan that’s not just for physicians. The Flagstar Bank physician loan is a ‘professional’s loan’ also open to ATP pilots, CPAs, and attorneys.
The program works like most other physician loans. Here’s everything you must know.
About Flagstar Bank
Flagstar Bank is most prevalent in the Northeast and Midwest but offers some opportunities in the Southeast and West Coast.
The bank dates back to 1987, when it started as First Security Savings Bank in Michigan and became Flagstar Bank in 1996.
- BBB Score: A+
- CEO: Thomas Cangemi
- Parent company: New York Community Bankcorp, Inc.
- Phone number: 800-945-7700
- Services offered: Personal, business, and commercial banking
Flagstar Bank Physician Loan Fast Facts
Here are some quick facts about Flagstart Bank physician loan products.
- Financing options: 100% financing on up to $1.5 million and low down payments on loans up to $1.5 million
- Maximum loan amount: $1.5 million
- Physician loan products: Fixed or adjustable-rate
- Qualifying degrees: MD, DDS, DMD, OD, MD, Doctor of Pharmacy, DPM, DO, RN, PA, Nurse Anesthetist, NP, Clinical Nurse Specialist, Veterinarian
- Private Mortgage Insurance: Not required
Flagstar Bank Physician Loan Qualifications
The Flagstar Bank physician loan has unique qualifying factors, including the following.
- Down payment: No down payment is required with a 720 credit score and up to $1 million loan; otherwise, a low down payment is required
- Property type: Single Family, PUD, or warrantable condo
- Great credit: At least a 720 credit score for 100% financing
- Employment: Must be within ten years of your profession
- First-time buyer: Only applicable for first-time buyers (for purchase)
- Interested-party contributions: Allowed
How to Apply
Knowing how to apply for a Flagstar physician loan is important to make the home-buying process as stress-free as possible.
Get Pre-Qualified
The first step is to talk to a loan officer about your qualifying factors to see if you’re a good candidate for a Flagstar Bank physician loan. You may also check your eligibility online. Either way, you provide information about your income, assets, degree, employment, and debts, and a Flagstar representative will determine if you meet the program’s requirements.
This step will help you understand how much you can afford to borrow and what terms you must meet, including how much money you need for a down payment if you don’t meet their 720 credit score requirement.
Gather the Necessary Documents
Before applying for a physician loan, you should gather the necessary documentation. This makes the process much smoother as you can provide the loan officer with everything needed to clear your conditions.
The documents required include:
- Income documentation: You must prove you can afford the loan payments. You do this by providing paystubs from the last 30 days and W-2s from the previous two years. An underwriter will review them to ensure your income is stable enough to afford the loan.
- Savings: Even if you don’t need a down payment, you need money for closing costs, and some borrowers require cash reserves to qualify for a loan, which is money in a liquid account to cover your mortgage payment if your income stops. Provide income and bank statements from the last two months to prove it.
- Degree: The Flagstar Bank physician loan is for many types of medical professionals, including RNs, NPs, and pharmacy doctors. You must prove you have the appropriate degree to qualify for the financing by providing a copy of your degree.
- Employment information: An underwriter must contact your employer to ensure you are currently employed and the position will continue for the foreseeable future. Providing employer contact information satisfies this condition.
Apply for Pre-Approval
After gathering your documentation and once you’re ready to look for a house, you should apply for pre-approval. This means you formally apply for a Flagstar Bank physician loan by completing a loan application and letting them pull your credit.
You must provide the above documentation and the application to prove you qualify for the loan. The underwriter will review the documentation and inform you of any conditions you must clear. For example, they may ask for further documentation if there are questions about your income or a specific debt.
Flagstar Bank will provide a pre-approval letter if you meet the requirements. This letter shows potential sellers how much you qualify for and on what terms and conditions you must clear. The conditions will always include a home appraisal and title search to ensure the property is worth at least as much as you offered and the seller has the legal rights to sell the property.
The pre-approval letter usually lasts for 90 days. If you don’t find a home within that time, you can apply for an extension but must provide updated documentation to prove you still qualify for the loan.
Eliminate the Conditions
While you search for a home, you can work on clearing any conditions. Flagstar Bank will handle any conditions that pertain to the house after you provide them with an executed sales contract.
The faster you clear the conditions, the more likely you can meet your contracted closing date. You’ll need the seller’s cooperation because they must schedule the appraisal, which can take a week or two to complete after the appraiser views the property.
Your loan officer should inform you of any new conditions or documentation required after the underwriter reviews the loan.
Close the Loan
Your final step is to close your Flagstar Bank physician loan! This step happens after you’ve cleared all conditions. Flagstar Bank will fund the loan at the closing to pay the seller so that you receive the keys to your new home. You begin making payments approximately 45 days after your closing.
Flagstar Bank Physician Loan Alternatives
The Flagstar Bank physician loan is a great option, but there are alternatives.
Huntington Bank
Huntington Bank has a loan program specific for physicians but is not open to as many medical professionals as the Flagstar Bank physician loan. The bank offers 100% financing on some loan amounts to MDs, DOs, DVMMs, and DMDs. They lend loans up to $2 million and don’t require PMI.
Fifth Third Bank
Fifth Third Bank allows loan amounts higher than Flagstar, as they lend up to $2 million, but you’ll need a down payment if you borrow more than $1 million. Like Flagstar, they offer fixed and adjustable-rate loans, and PMI isn’t required. You can also secure a loan if you’re a new or existing doctor.
BMO Bank
Unlike many other banks on this list, BMO Bank requires a 5% to 10% down payment because they don’t have a 0% down payment option. The program works for medical professionals in all stages, including residents, fellows, and newly established doctors. BMO Bank is one of the most flexible banks on this list.
Fulton Bank
Fulton Bank allows physicians, dentists, veterinarians, and pharmacists to borrow up to $1.5 million with no downpayment, up to $2 million with a 5% downpayment, and up to $3 million with a 10% downpayment.
Fulton Bank also allows gift funds from immediate family, and sellers can pay up to 6% of closing costs.
Pros and Cons
Like any bank, the Flagstar Bank physician loan has pros and cons. Here’s what to consider.
Pros
- No down payment is required with a 720 credit score and a $1 million loan
- Available for the first ten years of your career
- No PMI
Cons
- A down payment is required if you don’t have a 720 credit score
- Only available to first-time buyers
Frequently Asked Questions
The Flagstar Bank physician loan is a great program that can help many medical professionals. Here are some common questions people have about it.
Are Flagstar physician mortgage rates lower?
Because Flagstar has flexible underwriting guidelines for doctors and medical professionals, the interest rates may be higher than other loans. They are usually still competitive but slightly higher to compensate for the risk they pose to the bank with no money down on such a high loan amount.
How much money can I borrow with a Flagstar Bank physician loan?
Each borrower is eligible for a different loan amount. Flagstar’s basic guidelines state you can apply for up to $1 million with no money down if you have a 720 credit score and up to $1.5 million with a small down payment. However, you must prove you have the income and assets to qualify.
Are only doctors eligible for the Flagstar Bank physician loan?
The nice thing about the Flagstar Bank physician loan is it’s open to many medical professionals, not just doctors. Most programs restrict their plan to only doctors, but nurses, pharmacists, and vets also qualify at Flagstar Bank.
What are the benefits of a physician loan?
Physician loans provide medical professionals with more opportunities to qualify for mortgage financing before conventional financing would allow. This makes it easier to buy your dream home with little money down or even a high debt-to-income ratio because of your student loan debt.
Like at Flagstar Bank, most physician loans also don’t require PMI.
What credit score do you need for a Flagstar Bank physician loan?
Flagstar Bank prefers excellent credit and rewards borrowers with at least a 720 credit score to borrow up to $1 million with no money down.
